EC OK's RTVE redundancy plan

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BRUSSELS -- The European Commission on Wednesday cleared the Spanish government's plan to hand out €1.3 billion ($1.7 billion) in early retirement pay-offs at public broadcaster RTVE.

The EC said the plan will give RTVE, a "more cost-efficient" public service and "reduce the overall level of public support." It comes after RTVE negotiated with staff unions a package of drastic redundancies that came into force Jan. 1.

However, EC officials said the Spanish plan could set a standard for other pay-offs among public broadcasters across Europe as they seek to cut costs and provide more value for money.

"I am happy to approve aid for measures which promote the efficiency of a public service broadcaster and ultimately save taxpayers' money," European Union Competition Commissioner Neelie Kroes said.

The layoffs are part of RTVE's reforms that transformed the broadcasting group into a corporation -- a public limited company with an elected general director and a state shareholding that will be funded both by public subsidies and advertising income. They were aimed primarily at slashing RTVE's enormous deficit, estimated at €500 million ($657.3 million) a year.

Redundancies involving 4,150 employees, or 44% of the workforce, were negotiated with the staff unions. It includes a voluntary early retirement scheme for workers who reach the age of 52 before the end of 2008 and who had worked for RTVE for more than six years as of Dec. 31.

Eligible workers will receive 92% of their net salary until they reach the legal retirement age of 65. The state will finance the pre-retirement benefits for these workers but also will save their salary costs, which it would otherwise have to pay through the annual financing it provides to RTVE.

The EC said the measures were state aid, but it did not represent an unfair grant as it was considered proportional to the aim of ensuring that RTVE can fulfill its public service mission while maintaining financial stability.

In recent years, the EC has become more assiduous about vetting subsidies for public broadcasters. Only two years ago, the EC ordered the Spanish government to scrap its unlimited guarantee for RTVE, which had made the state ultimately responsible for the broadcaster's debts.

RTVE is the biggest audiovisual group in Spain and is financed by public funds as well as advertising. It owns TVE (Spanish TV), TVEI (International TVE), TVET (Thematic TVE) and RNE (National Radio of Spain).
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